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Where will you get health insurance in 2014?

By By Philip Moeller, U.S. News

Posted:
09/05/2013 02:40:16 PM MDT

Updated:
09/05/2013 02:41:43 PM MDT

(thelinke/istockphoto)

After years of legislative and constitutional debate and challenges, the centerpiece of the Affordable Care Act -- the requirement that most American adults obtain health insurance -- will become a reality in only a few months. By Oct. 1, the ACA requires that new state insurance exchanges be up and running to allow eligible individuals to apply for 2014 health insurance policies.

Right now, it's not clear that all the exchanges will be open for business or that they will have attracted enough participating health insurers to provide consumers with the kind of rate-lowering competition envisioned by the law's sponsors. Only a third of the states are setting up their own exchanges. For a variety of reasons, the rest are letting Uncle Sam do it for them.

To be effective, the exchanges will depend on a powerful set of new online information tools that federal regulators are developing. These tools are supposed to provide an on-demand look at an individual's tax, income and other eligibility information. The purpose of this information is to inform eligible Americans whether they qualify to get insurance through an exchange, the size of any federal subsidies they are entitled to and how much they would pay for the various health plans available from their state's exchange.

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Even if this number-crunching miracle is somehow pulled off, there's still the matter of communicating the law's requirements to consumers. Regulators are also gearing up for an 11th-hour marketing and publicity push, including recruiting people throughout the country to help consumers navigate the Affordable Care Act. Right now, opinion polls show large percentages of consumers still neither support nor understand the law.

Employers have traditionally provided most health insurance in the United States. President Barack Obama repeatedly has said that the ACA will be a non-event for most, if not nearly all, people who already have employer-provided insurance. But employers face so many decisions and possible penalties under the new law that it's not clear the president's statement will turn out to be accurate.

Employers certainly are expected to continue to be the primary provider of health insurance coverage in the U.S. But there may be many differences in their plans, including the features of the health insurance they offer, whether they will expand the ranks of part-time workers whom they don't have to cover and even the possibility of knowingly breaking the law and paying non-coverage penalties in order to save money.

Mercer, a subsidiary of Marsh & McLennan Companies that offers employee benefits services to employers, asked nearly 4,000 employers in May about how they would be affected by the Affordable Care Act and received about 900 completed surveys. Mercer concluded that employers are facing enormous uncertainties about the law's impact as well as widespread misunderstanding of what it requires of them.

"As we approach 2014, it's a bit concerning that 32 percent of employers know little about the actual cost impacts of the new changes," Mercer CEO Julio Portalatin said in a statement.

"While employers can calculate how many employees will be newly eligible for coverage, they can only guess how many will actually elect coverage," Mercer said in the statement. "All individuals are required to have health coverage in 2014, but because the tax penalty for not obtaining coverage insurance will be relatively low in 2014 -- just $95 per individual or 1 percent of household income, whichever is greater -- some employees may still choose to go bare."

Nearly a quarter of the employers surveyed have not yet figured out how to track and record the hours of employees with variable working hours, a requirement needed to verify that all employees working more than 30 hours a week are offered employer health coverage. Mercer says extending health insurance to all such employees will be the most disruptive adjustment that employers face in complying with the new law, especially in retail and food service companies that make heavy use of nontraditional work shifts.

"Some employers are attempting to protect themselves from big jumps in enrollment by raising employee contributions for coverage, particularly for dependents," Mercer said. "Nearly a third (30 percent) of respondents say they will require a bigger paycheck deduction for dependent coverage next year, and 13 percent will raise the contribution percentage for employee-only coverage."

Tracy Watts, who leads Mercer's health care reform consulting, said in an interview that she has heard three leading business concerns about the law:

1. The ACA imposes new health insurance fees that many employers have not focused on but could raise their costs by two to three percentage points in 2014.

2. On average, about 18 percent of employees are offered health insurance every year, but decline it, Watts says. Some may have coverage through their spouse's plan. Some may be 26 years old or younger and covered on their parent's plan. And some, particularly younger employees, may just forego coverage altogether. Employers don't really know how many of these employers will now accept coverage and thus how their plan participation and expenses will change next year.

3. The most expensive health plans, known informally as "Cadillac plans," may trigger a stiff excise tax for employers in 2018. Watts says nearly a third of employers surveyed responded that they are already taking steps in 2014 to begin reducing participation in such plans, both by offering lower-cost alternatives and by reducing the features and costs in the plans themselves. "From the day this law was passed in 2010," Watts says, "the No. 1 concern of employers has been that excise tax in 2018."

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